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The original Sea Sparrow was an expedient design intended to provide short-range defensive fire in a system that could be deployed as rapidly as possible. In the years after its introduction, it was upgraded to follow improvements being made in the air-to-air models used by the US Navy and US Air Force. The ultimate version in this line of weapons was the R model, which introduced a new dual-seeker homing system and many other upgrades. However, the AIM-120 AMRAAM offered higher performance from a missile that was smaller and lighter, and development of the Sparrow ended in the 1990s. This left only the Sea Sparrow using the basic platform, and it no longer had to fit on aircraft. So instead of simply using the P and R models as they were, it was decided to dramatically upgrade the weapon. The ESSM emerged as a completely new weapon, common only in name with the original, although using all of the same support equipment allowing it to be fit to ships already mounting the older models.

Compared to the Sea Sparrow, ESSM has a larger, more powerful rocket motor for increased range and agility, as well as upgraded aerodynamics using strakes and skid-to-turn. In addition, ESSM takes advantage of the latest missile guidance technology, with different versions for Aegis/AN/SPY-1, Sewaco/Active Phased Array Radar (APAR), and traditional target illumination all-the-way. ESSM Block II will leverage existing technology and features a dual-mode X-band seeker, increased maneuverability, and other enhancements. Unlike Block 1, Block 2’s active seeker will support terminal engagement without the launch ship’s target illumination radars. The improved ESSM Block II will be fielded by the US Navy from 2020.[7][8]

In addition to the Mk 29 GMLS and Mk 41 VLS systems, the other primary launcher is Mk 48 VLS. The 2-cell module of Mk-48 makes the system very versatile and enables it to be installed on board in spaces that otherwise cannot be utilized. The weight of a 2-cell module of Mk-48 is 660 kg (1,450 lbs) (with empty canisters), 330 kg (725 lbs) for exhaust system, and 360 kg (800 lbs) for ship installation interfaces. Each canister of the Mk-48 VLS houses a single RIM-7VL (Vertically Launched) Sea Sparrow cell or two RIM-162 ESSM cells, though, with modification, other missiles can also be launched. There are a total of four models in the Mk 48 family, with Mod 0 & 1 housing either 2 RIM-7VL or 4 RIM-162 cells, Mod 2 housing either 16 RIM-7VL or 32 RIM-162 cells. Mod 0/1/2 are usually grouped into either a 16-cell module for RIM-7VL or a 32-cell module for RIM-162. Mod 3 fits into the StanFlex modules on Royal Danish Navy ships and can house either 6 RIM-7VL or 12 RIM-162 cells; the Danes now use the latter.

In October 2003, at the USN Pacific Missile Range Facility near Hawaii, Australian frigate HMAS Warramunga conducted a successful firing of an ESSM. The firing was also the first operational use of the CEA Technologies CWI for guidance.[10][11]

In November 2003, approximately 200 nautical miles (370 km) from the Azores, the Royal Netherlands Navy (RNLN) frigate HNLMS De Zeven Provinciën conducted a live fire test of a single ESSM. This firing was the first ever live firing involving a full-size ship-borne Active electronically scanned array (i.e. the APAR radar) guiding a missile using the Interrupted Continuous Wave Illumination (ICWI) technique in an operational environment.[12] As related by Jane's Navy International:

During the tracking and missile-firing tests, target profiles were provided by Greek-built EADS/3Sigma Iris PVK medium-range subsonic target drones. [...] According to the RNLN, ... "APAR immediately acquired the missile and maintained track until destruction". [...] These ground-breaking tests represented the world's first live verification of the ICWI technique.[13]

In August 2004 a German NavySachsen class frigate completed a series of live missile firings at the Point Mugu missile launch range off the coast of California that included a total of 11 ESSM missile firings.[13] The tests included firings against target drones such as the Northrup Grumman BQM-74E Chukkar III and Teledyne Ryan BQM-34S Firebee I, as well as against missile targets such as the Beech AQM-37C and air-launched Kormoran 1 anti-ship missiles.[13]

Further live firings were performed by the Royal Netherlands Navy frigate HNLMS De Zeven Provinciën in March 2005, again in the Atlantic Ocean approximately 180 nautical miles (330 km) west of the Azores.[13] The tests involved three live-firing events (two of which involved the ESSM) including firing a single SM-2 Block IIIA at an Iris target drone at long range, a single ESSM at an Iris target drone, and a two-salvo launch (with one salvo comprising two SM-2 Block IIIAs and the other comprising two ESSMs) against two incoming Iris target drones.[13]

The first "kill" by the RIM-162D from a United States Navy carrier's MK 29 launcher was achieved during a training exercise by the USS John C. Stennis (CVN-74) on 7 October 2008.[14]

On 14 May 2013, the ESSM intercepted a high-diving supersonic test target, demonstrating the ability to hit high-G maneuvering, low-velocity air threats, as well as surface targets. No software changes were needed to prove the ESSM's enhanced capability.[15]

On 9 October 2016, USS Mason (DDG-87) fired one RIM-162 ESSM and two SM-2s to defend against two incoming Houthi anti-ship cruise missiles, potentially Chinese-built C-802 missiles. It is unknown if the RIM-162 was responsible for intercepting either of the missiles, but the incident marked the first time the ESSM was used in a combat situation.[16]